The Finance Ministry on Monday decided to discontinue GOI savings bonds featuring 8% return that were thrown open for subscription in the year 2003. The bonds were issued to boost retail investments.
With no upper cap for investment and a fixed tenure of 6 years, the subscription to 8% GOI Savings (Taxable) bonds from April 21, 2003.
In a statement the finance ministry said, "The Government of India (GoI) announced here today that 8% GOI Savings (Taxable) Bonds, 2003 shall cease for subscription with effect from the close of banking business on January 2, 2018".
But today, the ministry clarified that the scheme preferred because of its sovereign rating by retirees and senior citizens to get fixed income is being replaced by 7.75% scheme. This bond scheme gained interest more after the return on other bank fixed deposits, post office and MIS schemes dropped below 8%.
This decision comes on the back of declining interest rate on small saving schemes including post office schemes. Last week the government reduced rate by 20 bps or 0.2% on all of the small saving schemes except Senior Citizen Savings Schemes where the previous return of 8.3% is retained.